Opinion
Argued June 18, 1897
Decided October 5, 1897
George Putnam Smith for appellant. Lyman W. Redington for respondent.
The principal question on this appeal arises upon the defense of the Statute of Limitations.
The defendant is the receiver of Augustus Baus Co., a manufacturing corporation, appointed by an order or decree of the court made February 29, 1888, in proceedings under the statute for the voluntary dissolution of corporations. The complaint avers that the corporation has been dissolved and the averment is not denied in the answer. Construing this averment in connection with the statute under which the proceedings were instituted, which only provides for the appointment of a receiver as a part of the judgment for dissolution, it sufficiently appears that the defendant was appointed receiver on the final dissolution. (2 Rev. St. 468, § 65.) The powers of such a receiver are defined in the statute. By the 67th section such receivers are vested with all the estate, real and personal, of the corporation and they are declared to be "trustees of such estate for the benefit of the creditors of such corporation and of its stockholders." By the 68th section they are declared to possess all the power and authority conferred by law upon trustees to whom an assignment of the estate of insolvent debtors may be made pursuant to the provisions of the fifth chapter of the second part of the Revised Statutes.
The right of action on the notes was not barred on February 29, 1888, the date of the dissolution of the corporation and of the appointment of the receiver. The notes matured between September, 1887, and March, 1888. This action was not commenced until June 5, 1895, more than six years after the last note became due. The lapse of time would have barred an action on the notes against the corporation, if the corporation had continued in existence, and it is insisted that the receiver stands in the place of the corporation and is entitled to interpose the bar of the statute as a defense to the action, to the same extent that the corporation might have done if it had not been dissolved, and it had been sued upon the notes.
It is important to notice the real nature of the action. It is in form an action upon the notes, and judgment has been rendered thereon against the defendant in his representative character. In fact it is an action to ascertain and establish the status of the plaintiff as a creditor of the corporation, and as such entitled to share in the distribution of its assets in the hands of the receiver. The action was brought by permission of the court. There could be no pretense that the defendant was the debtor of the plaintiff or was personally liable upon the notes. The statute authorizing proceedings for the voluntary dissolution of corporations prescribes a method for ascertaining the claims of creditors and for a reference in case claims are disputed. But this method is not, we conceive, exclusive. The court may, nevertheless, when in its judgment it is proper so to do, authorize an action to be brought against the receiver who disputes the validity of a claim, so that the matter may be more deliberately examined and determined than in the summary method authorized by the statute. But whether the validity of a claim is ascertained by a summary reference or by action, the purpose of each proceeding is the same, to procure an adjudication for the guidance of the receiver in administering the estate of the corporation.
If the six years' Statute of Limitations would not have barred the allowance of the claim in a proceeding under the statute, it is not a bar to an action brought against the receiver for the same purpose. The action, we repeat, is not in a proper sense an action brought on obligations evidenced by the notes, but to ascertain whether the plaintiff was a creditor by reason thereof, entitled to share in the distribution of the estate of the corporation. It is undisputed that on the 29th of February, 1888, the date of the dissolution of the corporation, the notes were valid, subsisting, enforceable claims against the corporation. By the ancient common law, on the civil death of a corporation, its debts were extinguished and its property reverted to its grantor or was vested in the king, to the exclusion of creditors. (Angell Ames on Corp. § 779.) This rigorous and inequitable doctrine came, in time, under the benign influence of courts of equity, to yield to the juster view that, upon the dissolution of a corporation, its property became a trust fund for the payment of creditors and stockholders. This principle is incorporated into the statute for the voluntary dissolution of corporations in section 67, to which reference has been made. The estate is vested in the receiver for the "benefit of the creditors of such corporation and of its stockholders." The plaintiff was included in this class, and upon the appointment of the receiver he held the property of the corporation upon an express trust declared in the statute itself, for the common benefit of the plaintiff and other creditors. It was not a trust for the then ascertained creditors, but for all who should establish their status as creditors in the due course of the administration of the trust. The receiver did not hold the estate of the corporation adversely to the creditors or any of them. It was not a trust imposed upon the receiver by reason of misconduct. It was voluntarily assumed by him as the officer of the court which appointed him. His sole interest and duty was to administer the fund and property for the benefit of all existing creditors in obedience to the prescriptions of the statute and subject to the supervisory jurisdiction of the court.
The limitation of six years applicable to actions on contract is not an answer to the claim of the plaintiff in this proceeding. It is not set up by the debtor. The dissolution of the corporation made a suit and judgment against the corporation impossible. ( Hardman v. Sage, 124 N.Y. 25; United Glass Co. v. Vary, 152 id. 124.) The defendant, as we have said, is a trustee appointed by the court for the administration of the property of the corporation for the benefit of all its creditors, including the plaintiff, and the authorities are decisive that the statute does not run in favor of the trustee against claims not barred at the time of the appointment so long as the trust is open and continuing and has not been repudiated or denied. ( Lammer v. Stoddard, 103 N.Y. 672; Zebley v. F.L. T. Co., 139 id. 461.) The rule is different in case of implied or constructive trusts forced upon the conscience of a party as a means of preventing the consummation of a wrong. ( Lammer v. Stoddard, supra; In re Leiman, 32 Md. 225.) In the case of express and admitted trusts the possession of the trustee is not hostile or adverse to the claim of the cestui que trust and is consistent with the continuing recognition of the trust relation until that relation is distinctly disclaimed. The cases arising in bankruptcy or under the insolvent laws of a state are numerous to the effect that from the time of the institution of the proceedings and the appointment of an assignee or trustee in bankruptcy or insolvency, the running of the statute is suspended as to claims not then barred, and that the assignee or trustee cannot resist payment because more than the statutory period for bringing an action on the claim has elapsed before payment was demanded. ( Ex parte Ross, 2 Glyn Jameson, 46, 330; Minot v. Thacher, 7 Met. 348; Parker v. Sanborn, 7 Gray, 191; Von Sachs v. Kretz, 72 N.Y. 548, 556; In re Leiman, supra.) The case of the appointment of a receiver for the final winding up of the estate of a dissolved corporation is plainly within the reason upon which the authorities cited proceed. (See Kirkpatrick v. McElroy, 41 N.J. Eq. 555.)
There are many cases of trust within the comprehensive meaning of that tern where there is a concurrent, legal and equitable remedy. In such cases the general rule is that if the legal remedy is barred the equitable remedy is barred also. ( Kane v. Bloodgood, 7 John. Ch. 90.) An executor or administrator is in a proper sense a trustee for creditors and persons interested in the estate of the decedent, as legatees or next of kin. The executor or administrator may, although a trustee, interpose the Statute of Limitations as a defense to an action to recover a debt not barred at the death of the decedent. This right is recognized by statute. It is the policy of the law regulating the settlement of estates of decedents that claims should be presented and adjusted without unreasonable delay. The executor or administrator is the representative of the decedent, and is entitled to make all defenses which the testator or intestate could have made if living. There is little analogy between a person standing in such a relation and the position of a receiver of the estate of a dissolved corporation, appointed as the officer and agent of the court to get its assets and distribute them among its then existing creditors. We think the defense of the Statute of Limitations was properly overruled. The judgment establishes the claim of the plaintiff, but the plaintiff acquires thereby no preference over other creditors. ( In re Waterbury, 8 Paige, 380.)
We are also of opinion that the waiver of protest of the notes indorsed by the corporation, made by Baylies, in his character both as receiver and as secretary and treasurer of the corporation, was valid, for reasons which are sufficiently stated in the opinion below.
We find no error in the record requiring a reversal of the judgment, and it should, therefore, be affirmed, with costs.
All concur, except GRAY, J., absent.
Judgment affirmed.